We will watch very closely how the lawsuit between the McLennan County Appraisal District and owners of the Sandy Creek coal-fired power plant unfolds in court. So should you. If Sandy Creek wins, and its valuation is lowered from $884.5 million to $253.5 million, it will touch off a cascade of similar suits by every industrial business in the county looking to lower its tax footprint.
Local tax dollars could ultimately take a massive hit, setting off widespread budget cuts in some or all of the 44 taxing entities in the appraisal district. Sandy Creek vs. the taxpayers of McLennan County is a major precedent-setting suit, and it’s a slippery slope if the power plant wins.
Sandy Creek’s ownership group is seeking a decrease of more than 70 percent of the value of its plant near Riesel, completed only one year ago at a cost of $1.2 billion.
I’m guessing if they were to sell it, the asking price would be closer to $884 million than it would to $235 million. So why should the appraisal district lower the value now? The short answer is, it’s not. Hence the lawsuit, filed by Sandy Creek.
The burden here lies solely on the ownership group for the plant. It’s one thing to seek a lower valuation, a common practice we all go through at some point. Nobody likes to pay taxes and we’re all motivated to minimize our “fair share.” To that end, Sandy Creek’s request for lower valuation is no surprise. In fact, we’d be surprised if it did not ask for a lower valuation each and every year.
But every tax assessor, collector and appraisal district in the country would laugh us out of their office if we went in asking for a 70 percent break on a 1-year-old house.
So far lawyers from Sandy Creek have been mum, citing pending litigation and the need to huddle with owners before publicly commenting.
However complicated Sandy Creek’s business model is, it remains up to its owners to explain why a property that cost $1.2 billion to build 12 months ago is only worth $235 million today. And that explanation is not just for the court or the appraisal district. It needs to be made perfectly clear for all of us. Given that the power plant is the largest taxpayer in McLennan County, a reduction of this size will impact all one way or another. It will certainly have a negative impact on the Riesel school district.
So please hold the legal jargon to a minimum and level with us as you explain how this is possible, especially for a plant that produces a product so much in demand.
Both the local appraisal district and Sandy Creek have a lot at stake here, so both are girding up for a long and tedious court battle that could last months or even years.
When lawsuits like this are finally decided, many times the decision sets a precedent that’s hard to overcome. In other words, if Sandy Creek wins, others are sure to follow in its footsteps — much to detriment of the local tax base.
Who’s to say the entire valuation in McLennan County isn’t 70 percent too high? Every house, every business . . . every single parcel of land.
It’s staggering to think about the long-term ramifications of this pending suit. Are we crying wolf here? Probably a little. But not as much as you’d like to think.
Not every taxpayer or taxpaying business has the legal resources to see a suit like this through to the end. Problem is, they won’t need pockets as deep as the consortium that owns Sandy Creek. This suit will pave a legal path for anyone else looking for a tax break if Sandy Creek wins.
As expected, the local appraisal review board upheld Sandy Creek’s $884.5 million valuation during a review in June. Now the fight goes into the court system where it will work its way up the chain . . . and away from McLennan County.
At this point, even a settlement poses great risk to the 44 taxing entities that utilize the McLennan County Appraisal District and the taxpayers they serve.
Pay very close attention to Sandy Creek vs. the appraisal district. There’s more at stake than the bottom line of a single large taxpayer.
Steve Boggs is editor of the Waco Tribune-Herald. Email firstname.lastname@example.org